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Risk factor
Economic data is constantly disappoint? Of course, this is not normal. But our time is hardly "normal". Let's try to explain the phenomenon, which became widely known as "withdrawal from risk" and "risk appetite".
Since then, as in 2008, the great financial crisis has been discussed many such "absurd" periods. The summer of 2011, during which there has been an escalation of the European debt crisis and the U.S. has recorded an unprecedented decline in the economy and there were fears the transition of the global economy the global recession, was a time when such "wrong" phenomenon occurred continuously. If You like, then it could be called the "new normal". How does it all work?
American indexes are in the lead
In "normal" times the rate of the dollar against other currencies increases with good economic data and falls in faint. In "bad" times, the world is watching US in order to understand which way the world economy. USA is still considered the locomotive of global growth, as well as a source of global problems, despite the fact that it is now noticeably shifted the emphasis to the far East, particularly China.
Except as a supplier of leading indicators for the global economy, the US, as many still think that is a safer place for investment than many other developed countries, no matter how good they're doing.
So if the US economic statistics show "slack", global pessimism is growing again and the demand for the dollar as the currency of the security zone. This is referred to as "withdrawal from risk" or "flight from risk". When the US economy shows signs of growth, the status of the dollar as a "safety zone" is reduced.
"Safe" and "risky" currencies
The Swiss franc is the king of "security": Switzerland has a highly developed economy and strong banking system. Frank temporarily lost this role during the financial crisis, but is now back on top, again unsurpassed in this quality.
Second place – the Japanese yen, but here the picture is radically different - Japan's economy is struggling, and the country has a huge national debt. But still, the yen is also considered to be quite stable.
Third place in this rating belongs to the U.S. dollar.
Australia and New Zealand are the opposite of this list: in both countries a stable economy. Credit rating in Australia is AAA. However, once in the United States are "weak" evidence of the threat to global growth, AUD and NZD then "suffer".
The canadian dollar is about the same position, but he is still more closely associated with the U.S. dollar. Canada's neighbour and largest trading partner of the United States. The weaker economy in the United States, the weaker and in Canada = and the weaker canadian dollar.
The Euro is in the basket of "risky"currency, but it is currently less dependent on American markets, as the single currency is experiencing its own, of increasing difficulty.
The British pound is trying to break out of currencies "risk" that Britain plans to reduce the budget deficit, but the pound still tends to weaken on the "bad" us data.
What happens when the us releases show positive?
Now, the opposite occurs: the U.S. dollar advances against the yen and the franc, giving the positions of the other currencies. It's called “risk appetite“.
This phenomenon is quite limited. Why? When out a long series of "positive" American indices, or when releases from the US happen "pleasant" surprises, we begin to return to the "old normal" when the world was more stable and even had prospects for significant growth.
But we are still far from this "old rules".
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| Category: Forex | Added by: (30.10.2017)
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| Views: 330
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